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A shortage of foreign currency is hampering Zimbabwe’s growth efforts

05 July 2018 - 14:59
Godfrey Marawanyika

An illegal foreign currency trader counts notes at a local bus station in Zimbabwe’s capital Harare in November 2016. Picture: REUTERS

Harare — The shortage of foreign currency in Zimbabwe is hampering efforts by the new government to boost economic growth as it impeded sectors from milk output to manufacturing in the first quarter, the finance ministry has said.

The growth impetus provided by the new government under President Emmerson Mnangagwa is being weighed down by the shortage of foreign currency for the importing of critical raw materials for production and the late onset of rains during the 2017-18 agricultural season, the ministry said in a quarterly bulletin sent by e-mail.

It also hit milk production, which declined due to an outbreak of a tick-borne disease, the impact of which was worsened by the shortage of foreign currency to buy treatment chemicals, which compromised productivity of the dairy herd, the ministry said. Milk output dropped to 17-million litres in the three months until end-March from 17.8-million in the previous quarter.

Mnangagwa has pledged to end almost two decades of economic decline. Zimbabwe abandoned its currency in 2009, after the International Monetary Fund (IMF) estimated inflation had topped 500-billion percent, and has mainly used the dollar since then. In 2016, it introduced bond notes as a form of currency.

Economic growth is projected to quicken to 4.5% this year from 3.7% in 2017, and to reach 6% by 2020, according to the finance ministry.